Spanish Promoters Hoping For VAT Cut

After the Canary Islands reduced their value-added tax (VAT) rate, mainland Spain is awaiting the same.

The Canaries are an autonomous region, politically attached to Spain, geographically to Africa. The group of islands is traditionally taxed differently from Spain itself. The VAT on the islands was 7 percent until being reduced to 3 percent just recently. Mainland Spain is struggling with a VAT rate of 21 percent, which has been in effect since 2012, when government taxed businesses heavily while the country was facing a recession.

It had been 8 percent before that, and the steep increase heavily affected promoters. Last week, the country’s Socialist Workers’ Party suggested a VAT reduction from 21 to 10 percent, El Pais reported.

The creative sector is hoping that the Canaries’ decision will nudge the Spanish government in the right direction. Jesús Cimarro of Spain’s theater association congratulated the Canaries on their decision. He pointed out that Spain needed to follow suit.

He told that the cultural sector did not increase ticket prices after the 2012 VAT increase, which is why it did not generate margins.

“When there are no margins, there is no investment, and what we have been saying over the last few years is, that companies with the capacity to invest will reverse the country’s economy,” he said.

Pascual Egea of Spainish promoters’ association APM called the Canaries’ decision “great news.”

“Finally someone with common sense, who understands the importance of culture,” Egea said. “The VAT increase to 21 percent has influenced our industry economically because it came at the worst moment, in the midst of crisis. In the first months our turnover fell almost 30 percent and still, four years later, we have not recovered.”